Driving Innovation through Energy Efficiency: A Russian Regional Analysis

Recent literature on energy efficiency focuses on the issues of energy security and options for reducing energy consumption. Measuring energy efficiency properly and forecasting future needs is critical to the energy policies of any country, especially given the importance of sustainability in their economic development. The role innovation plays in improving energy efficiency is well researched. There is a gap in examining an opposite relationship. That is, where energy efficiency becomes a critical factor for fueling innovation. This impact can occur within a company, a region, a nation or on an international level. Here we show that regions could motivate business innovations through policies requiring energy efficiency. Based on observations from a number of regions of an emerging economy, we show that energy efficiency impacts innovation. As a side effect it can contribute to export increases, which in turn can improve regional attractiveness for investors. We believe that the spiral development of the relationship between energy efficiency and innovation used as a strategy could become sustainable.